Scott A. Smith
ViatrisAbout Scott A. Smith
Scott A. Smith is Chief Executive Officer of Viatris (since April 1, 2023) and a director (since December 29, 2022), age 63, serving on the Science and Technology Committee . He previously served as President of BioAtla (2018–2023) and rose to President and COO at Celgene (2008–2018) after roles including SVP and Global Head of Immunology . Education: BSc in Chemistry and Biology, HBSc in Pharmacology and Toxicology (University of Western Ontario), and MS in International Management (American Graduate School of International Management); he is “a pharmacologist by training” per company remarks . Under his leadership and the company’s plan, Viatris delivered above-target 2024 annual incentive performance (Adjusted EBITDA and Free Cash Flow exceeded targets) with payouts capped at 140% due to negative discretion tied to the Indore, India import alert, and management emphasized strong cash generation and deleveraging; since the 2020 combination, Viatris generated $7.2B free cash flow, repaid $6.6B of debt, and returned $1.8B to shareholders, with two consecutive quarters of operational revenue growth in 2023 cited by Smith .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| BioAtla, Inc. | President | 2018–2023 | Built clinical development structure, moved multiple assets from INDs into late-stage development; led strategic plan and business development |
| Celgene Corporation | SVP & Global Head of Immunology; President, Inflammation & Immunology; President & COO | 2008–2018 | Led oncology, inflammation and immunology franchises, commercial ops and clinical development; oversaw Otezla’s development and global commercial success |
External Roles
| Organization | Role | Years | Committee roles / notes |
|---|---|---|---|
| BioAtla, Inc. | Director | Since 2020 | Current public company board |
| Apexigen, Inc. | Director | 2019–2023 | Compensation; Corporate Governance & Nominating Committees |
| Titan Pharmaceuticals, Inc. | Director | 2017–2020 | Chair, Compensation; Chair, Nominating & Governance Committees |
| Triumvira Immunologics, Inc. | Director and Chairman | 2018–2023 | Former private company board |
| Refuge Biotechnologies, Inc. | Director | 2018–2022 | Former private company board |
| F‑star Therapeutics, Inc. | Chairman, Director | 2018–2020 | Audit; Nominating & Corporate Governance Committees |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (%) | Actual Bonus ($) |
|---|---|---|---|
| 2023 | 1,023,077 (prorated) | 150% of base | 2,884,494 (prorated for service period) |
| 2024 | 1,400,000 | 150% of base (Target $2,100,000) | 2,940,000 (paid at 140% of target after negative discretion) |
Performance Compensation
| Year | PRSUs ($) | RSUs ($) | Total LTI ($) | PRSU % of LTI |
|---|---|---|---|---|
| 2023 | 7,280,000 | 3,920,000 | 11,200,000 | 65% (continued practice) |
| 2024 | 6,370,000 | 3,430,000 | 9,800,000 | 65% (with TSR modifier) |
2024 Annual Incentive Metrics and Results
| Metric | Weighting | Threshold | Target | Maximum | Result |
|---|---|---|---|---|---|
| Adjusted EBITDA | 40% | $4,700M | $4,950M | $5,200M | $4,974.5M |
| Free Cash Flow | 40% | $2,200M | $2,500M | $2,800M | $2,923.8M |
| Global Regulatory Submissions | 20% | 100 | 120 | 140 | 140 |
Annual Incentive Outcomes
| Year | Target Bonus ($) | Achieved Funding (%) | Board Discretion Applied | Actual Payout ($) |
|---|---|---|---|---|
| 2023 | 2,100,000 (full-year target; prorated for service) | 182.31% | N/A disclosed | 2,884,494 (prorated) |
| 2024 | 2,100,000 | 163.92% | Reduced to 140% due to Indore import alert | 2,940,000 |
Three-Year PRSU Performance Design
| Grant Year | Metric Design | Payout Mechanics |
|---|---|---|
| 2022 | 100% Free Cash Flow; Relative TSR modifier vs S&P 500 Pharma Index (−30%, 0%, +30%) | Initial FCF payout (50%–150% of target), then TSR modifier applied to determine final payout |
| 2023 | Free Cash Flow and relative TSR (S&P 500 Pharma Index) | PRSUs earned based on multi-year FCF with TSR modifier, RSUs vest ratably over 3 years |
Equity Ownership & Alignment
Security Ownership and Upcoming Vesting
| Date | Shares Beneficially Owned | % of Class | Shares Outstanding |
|---|---|---|---|
| Oct 18, 2024 | 85,350 | <1% | 1,193,592,902 |
| Oct 20, 2025 | 314,807 | <1% | 1,154,467,256 |
Outstanding Equity Awards at 12/31/2024 (CEO)
| Award Type | Unvested Units (#) | Market Value ($) | Vesting Schedule |
|---|---|---|---|
| RSUs | 293,399 | 3,652,818 (at $12.45/share) | 146,700 vested Mar 3, 2025; 146,699 vest Mar 3, 2026 |
| RSUs | 289,291 | 3,601,673 (at $12.45/share) | Per plan terms; schedule disclosed in table footnotes |
| PRSUs | 817,327 | 10,175,721 (at $12.45/share) | Will vest Mar 3, 2026 subject to performance |
| PRSUs | 537,253 | 6,688,800 (at $12.45/share) | Will vest Mar 4, 2027 subject to performance |
Stock Vested in 2024
| Year | Shares Vested (#) | Value Realized ($) |
|---|---|---|
| 2024 | 140,727 | 1,771,753 |
Ownership Guidelines and Trading Policies
- CEO share ownership requirement: 6x base salary; five-year compliance window; in 2025, unearned PRSUs excluded from ownership calculations; all NEOs meet or are expected to meet requirements .
- Anti-hedging and anti-pledging: directors and Section 16 officers prohibited from hedging and pledging; exceptions require prior approval and demonstration of capacity to repay loans without resorting to pledged securities .
- Clawback: robust recoupment policy applies to incentive compensation for misconduct; Dodd-Frank compliant “no-fault” restatement clawback adopted in Q4 2023 .
Employment Terms
| Item | Detail |
|---|---|
| Employment start date | CEO effective April 1, 2023; director since December 29, 2022 |
| Base salary | $1,400,000 |
| Target annual bonus | 150% of base (pro-rated for 2023) |
| Long-term incentive | Intended grant-date value 800% of base in 2023; 700% thereafter |
| Severance (no CIC) | If terminated without cause on/after June 30, 2024: 2x base + target bonus, paid in installments; prior to June 30, 2024: 1x |
| Severance (CIC) | If terminated without cause or for good reason within 24 months of CIC: 2.5x base + target bonus; paid in installments |
| Estimated payouts (Dec 31, 2024) | No CIC: cash severance $7,000,000; PRSU vesting value $9,013,427 (assuming target) . CIC termination: cash severance $8,750,000; non‑qualified deferred comp vesting $49,659; equity vesting $24,119,012 . Death/disability: full vesting of equity awards (value $24,119,012) and unvested deferred comp; no cash severance |
| Equity vesting on CIC | Company plan prohibits automatic single‑trigger; annual LTI uses double‑trigger vesting |
| Restrictive covenants | Offer letter contingent on execution of confidentiality/restrictive covenant agreements; specifics not disclosed |
| Deferred compensation | 2024 Restoration Plan balance and activity: Aggregate balance at FYE $428,958; contributions $157,580; company match $206,095; earnings $9,478; withdrawals — |
Board Governance
- Board structure: independent Chair (Melina Higgins) with significant authority; Chair leads the Executive Committee and presides over executive sessions; CEO focuses on daily management and strategy execution; Vice Chair appointed (Mark Parrish) .
- Committee service: Smith serves on Science and Technology .
- Dual‑role implications: Separation of CEO and Chair roles mitigates concentration of power and supports independent oversight; Smith is a management (non‑independent) director, with governance practices designed for accountability and strategy oversight .
- Director compensation: Employee directors (including Smith) receive no compensation for concurrent Board service; non‑employee director compensation structure includes cash retainers and RSU grants (Chair $225,000; member retainer $150,000; annual RSUs $225,000 in 2024–2025) .
Compensation Structure Analysis
- Pay mix shifted toward performance: 65% of LTI delivered as PRSUs with TSR modifier; RSUs vest ratably over three years; Smith’s LTI multiple reduced from 800% to 700% of salary starting 2024 per offer letter, reinforcing pay-for-performance .
- Annual incentive rigor increased: 2025 maximum Adjusted EBITDA raised to 110% of target; Global Regulatory Submissions weighting reduced to 10%; personal objective (10%) added .
- Shareholder responsiveness: 2024 Say-on-Pay was disappointing; Board ended former Executive Chairman’s consulting arrangement and enhanced ownership policy (exclude PRSUs) .
- Governance safeguards: No excise tax gross‑ups, no stock option repricing, no automatic single‑trigger vesting; awards subject to clawback and anti‑hedging/pledging policies; administered by independent Compensation Committee .
Say‑on‑Pay & Shareholder Feedback
- 2024 Say‑on‑Pay: Company noted disappointing vote and attributed it primarily to concerns over the transitional consulting arrangement with the former Executive Chairman; arrangement ended June 30, 2025 after engagement with holders representing ~50% of outstanding shares .
- Program alignment: Board recommends “FOR” votes on annual Say‑on‑Pay; program designed to incentivize long‑term value creation; annual Say‑on‑Pay cadence maintained .
Equity Ownership & Alignment Details
- Ownership guidelines: CEO 6x salary; five years to comply; in 2025, unearned PRSUs excluded from calculation; all NEOs meet or are expected to meet guidelines .
- Anti‑hedging/pledging: Strict prohibitions for directors and Section 16 officers; exceptions require advance approval and capacity to repay without resorting to pledged shares .
- Beneficial ownership: Smith held 85,350 shares as of Oct 18, 2024; 314,807 shares as of Oct 20, 2025; both <1% of outstanding .
Employment & Contracts (Retention Risk)
- Severance economics imply meaningful retention incentives with larger CIC multiple (2.5x) and double‑trigger equity vesting, but still aligned to performance and shareholder outcomes .
- Offer letter references confidentiality/restrictive covenants; specific non‑compete/non‑solicit terms not disclosed publicly .
- Restoration Plan balance vests fully upon death/disability and in CIC; annual contributions and company match disclosed .
Performance & Track Record
- 2024 STI results exceeded targets in Adjusted EBITDA ($4,974.5M vs $4,950M target), Free Cash Flow ($2,923.8M vs $2,500M target), and regulatory submissions (140 vs 120 target), but payouts reduced via negative discretion due to Indore facility import alert .
- Strategic execution: CEO commentary highlighted strong 2023 operational performance, divestitures to streamline portfolio, Phase 2 growth pivot, and capital allocation plan targeting ≥$2.3B annual free cash flow and ~50% returns to shareholders through dividends/buybacks .
Compensation Peer Group (Benchmarking)
- 2024 peer group included Abbott, Amgen, Biogen, Bausch Health, Baxter, Bristol‑Myers Squibb, Eli Lilly (removed in 2025), Gilead, Novartis, Organon, Pfizer, Regeneron, Sanofi, Teva, Zoetis; in 2025 Sandoz was added and Lilly removed .
Risk Indicators & Red Flags
- Indore facility warning letter/import alert led to reduced 2024 annual incentive payouts via Board discretion .
- Anti‑hedging/pledging policy mitigates alignment risks; no excise tax gross‑ups and no option repricing reflect shareholder‑friendly posture .
- Disappointing 2024 Say‑on‑Pay led to structural changes; ongoing shareholder engagement noted .
Compensation Committee Analysis
- Committee uses independent compensation consultant (Meridian) and considers risk management; annual reviews of metrics and practices to avoid excessive risk-taking; program emphasizes performance‑based pay with double‑trigger CIC vesting .
Investment Implications
- Alignment: High at‑risk pay with 65% PRSUs and rigorous STI metrics (plus TSR modifier) aligns CEO incentives with FCF, EBITDA, and multi‑year relative performance; strengthened ownership policy excluding PRSUs increases skin‑in‑the‑game requirements .
- Retention vs. dilution: Large scheduled RSU/PRSU vesting through 2026–2027 (RSUs 293,399 and PRSUs 817,327/537,253) create predictable equity delivery; while vesting can add supply, anti‑pledging and clawback policies mitigate misalignment risks; monitor Form 4s for selling pressure around vest dates .
- Downside protection and CIC costs: Severance multiples (2x; 2.5x on CIC) plus full equity vesting on CIC imply potential payout magnitude ($8.75M cash + ~$24.1M equity in illustrative 12/31/2024 scenario) that could affect M&A economics; double‑trigger governance moderates immediate acceleration risk .
- Governance trajectory: 2024 Say‑on‑Pay feedback catalyzed changes (ending consulting arrangement, tougher goals); independent Chair structure reduces dual‑role concerns and supports oversight of execution in Phase 2 capital allocation strategy .